Current through Register Vol. 63, No. 12, December 1, 2024
(1)
Subject to the exemptions described in OAR
836-012-0240 and the provisions
of OAR 836-012-0260
(2), credit for reinsurance shall be allowed
with respect to ceded liabilities pertaining to Covered Policies pursuant to
OAR 836-012-0031 if, and only if, in
addition to all other requirements imposed by law or regulation, the following
requirements are met on a treaty-by treaty basis:
(a) The ceding insurer's statutory policy
reserves with respect to the Covered Policies are established in full and in
accordance with the applicable requirements of ORS
733.302 and related regulations
and actuarial guidelines, and credit claimed for any reinsurance treaty subject
to this rule does not exceed the proportionate share of those reserves ceded
under the contract; and
(b) The
ceding insurer determines the Required Level of Primary Security with respect
to each reinsurance treaty subject to this rule and provides support for its
calculation as determined to be acceptable to the director; and
(c) Funds consisting of Primary Security, in
an amount at least equal to the Required Level of Primary Security, are held by
or on behalf of the ceding insurer, as security under the reinsurance treaty
within the meaning of OAR
836-012-0060, on a funds
withheld, trust, or modified coinsurance basis; and
(d) Funds consisting of Other Security, in an
amount at least equal to any portion of the statutory reserves as to which
Primary Security is not held pursuant to OAR
836-012-0260
(1)(c), are held by or on behalf of the
ceding insurer as security under the reinsurance treaty within the meaning of
OAR 836-012-0060; and
(e) Any trust used to satisfy the
requirements of OAR 836-012-0260 shall comply with
all of the conditions and qualifications of OAR
836-012-0070, except that:
(A) Funds consisting of Primary Security or
Other Security held in trust shall for the purposes identified in OAR
836-012-0250
(2), be valued according to the valuation
rules set forth in OAR
836-012-0250
(2) as applicable; and
(B) There are no affiliate investment
limitations with respect to any security held in such trust if such security is
not needed to satisfy the requirements of OAR
836-012-0260
(1)(c); and
(C) The reinsurance treaty must prohibit
withdrawals or substitutions of trust assets that would leave the fair market
value of the Primary Security within the trust (when aggregated with Primary
Security outside the trust that is held by or on behalf of the ceding insurer
in the manner required by OAR
836-012-0260
(1)(c)) below 102 percent of the level
required by OAR 836-012-0260
(1)(c) at the time of the withdrawal or
substitution; and
(D) The
determination of reserve credit under OAR
836-012-0070
(4)(c) shall be determined according to the
valuation rules set forth in OAR
836-012-0250
(2), as applicable; and
(f) The reinsurance treaty has been approved
by the director.
(2)
Requirements at Inception Date and on an On-going Basis; Remediation
(a) The requirements of OAR
836-012-0260
(1) must be satisfied as of the date that
risks under Covered Policies are ceded (if such date is on or after January 1,
2023) and on an ongoing basis thereafter. Under no circumstances shall a ceding
insurer take or consent to any action or series of actions that would result in
a deficiency under OAR
836-012-0260
(1)(c) or OAR
836-012-0260
(1)(d) with respect to any reinsurance treaty
under which Covered Policies have been ceded, and in the event that a ceding
insurer becomes aware at any time that such a deficiency exists, it shall use
its best efforts to arrange for the deficiency to be eliminated as
expeditiously as possible.
(b)
Prior to the due date of each Annual Statement, each life insurance company
that has ceded reinsurance within the scope of this rule shall perform an
analysis, on a treaty-by-treaty basis, to determine, as to each reinsurance
treaty under which Covered Policies have been ceded, whether as of the end of
the immediately preceding calendar quarter (the valuation date) the
requirements of OAR 836-012-0260
(1)(c) and OAR
836-012-0260
(1)(d) were satisfied. The ceding insurer
shall establish a liability equal to the excess of the credit for reinsurance
taken over the amount of Primary Security actually held pursuant to OAR
836-012-0260
(1)(c), unless either:
(A) The requirements of OAR
836-012-0260
(1)(c) and OAR
836-012-0260
(1)(d) were fully satisfied as of the
valuation date as to such reinsurance treaty; or
(B) Any deficiency has been eliminated before
the due date of the Annual Statement to which the valuation date relates
through the addition of Primary Security and/or Other Security, as the case may
be, in such amount and in such form as would have caused the requirements of
OAR 836-012-0260
(1)(c) and OAR
836-012-0260
(1)(d) to be fully satisfied as of the
valuation date.
(c)
Nothing in OAR 836-012-0260
(2)(b) shall be construed to allow a ceding
company to maintain any deficiency under OAR
836-012-0260
(1)(c) and OAR
836-012-0260
(1)(d) for any period of time longer than is
reasonably necessary to eliminate it.
Statutory/Other Authority: ORS
731.244, ORS
731.508 -
731.511 &
731.514